When it comes to managing shelves and stocks at the store level, retailers are facing some difficult challenges. The rise of eCommerce and omnichannel shopping has led to unpredictable buying patterns. Consumers may research products online and purchase in-store, or vice versa. Sudden stock-outs contribute to missed sales and alienated customers, which has tangible implications for revenue and margin. Conversely, overstocking leads to markdowns, which also impacts profitability. Retailers like H&M and many others have faced challenges with overstock in the past.

AI-driven automated forecasting capabilities are improving by leaps and bounds. Unfortunately, a precise and accurate forecast isn’t worth much if the forecast is not reflected in actual store-by-store operations. That’s a problem, because when it comes to customer loyalty, in-store and online experiences are intimately connected. A substandard experience at a single store will also impact a customer’s online buying behavior. With more fulfillment channels now in play, forecasts need to translate into ideal stock levels across all channels — including, crucially, the in-store channel.

Retailers can adapt to these new omnichannel customer behaviors by adopting digital shelf management technology, which is well positioned to deliver seamless and reliable omnichannel experiences and supercharge customer trust.

Digital Shelf Management for Store Operations

The first line of defense in ensuring planogram compliance and reducing stockouts is the store associate team. Digital shelf management empowers these store associates with the technology they need to continuously and more comprehensively monitor their shelves. Digital shelf technology leverages store associate mobile devices and CCTV cameras, along with AI-driven image processing, to gather real-time data on the current state of an individual store’s shelf sets.

With mobile devices, store associates can scan shelf sets and ensure planogram and pricing compliance while also enabling real-time shelf inventory monitoring (including low stock and stock-outs). A digital shelf management platform can then respond by triggering operational tasks like backroom replenishment. Mobile-based digital shelf management is particularly well-suited for sectors like specialty, electronics, fashion, and home accessories, as they have small fixture sets that can be efficiently captured by a mobile camera.

Digital shelf management powered by CCTV cameras is more suited for sectors like food and grocery, as they tend to have wide fixture sets. Based on live CCTV footage, an AI-driven digital shelf platform can recognize incorrectly placed and missing items, then notify store associates and managers to replenish stock or correct item placements/facings. Drones have also been used effectively when in-store cameras are not adequate.

In the past, tedious manual audits were the only way to ensure correct item placement and prompt re-stocking. Digital shelf management technology dramatically reduces the time and cost of conducting shelf audits, increasing the amount of time that associates can spend with customers.

Digital Shelf Management for Corporate Visibility and Decision-Making

In addition to helping store associates deliver attractive, well-stocked, and compliant shelf sets, digital shelf management is a powerful tool for corporate users.

In the past, corporate visual merchandising teams did not have real-time visibility on planogram compliance, and were unable to recognize lost sales opportunities due to misplaced or missing items. Data from digital shelf technology allows corporate stakeholders to recognize store-by-store noncompliance patterns in real-time and intervene to improve compliance and performance.

Digital shelf technologies will also serve to fill in supply chain data gaps that have long frustrated corporate retail functions. While inventory management and PoS systems provide corporate leaders with some sense of what is going on in their stores, numerous black boxes remain. Misplaced inventory, incorrect deliveries, and unexpectedly successful promotions can create wide gaps between a company’s perceived out-of-stock rate and the actual reality on the ground.

With digital shelf technologies, corporate decision-makers can leverage data about stock-outs and incorrect shelf sets to attribute shelf-level problems to larger back room, warehouse, logistics, and vendor-related causes. Corporate teams can then use digital shelf technologies to draw correlations between non-compliance and store performance. They can also leverage digital shelf technologies to accelerate sustainable visual merchandising by eliminating the paper-based workflows that have traditionally been used for planogram compliance.

In-Store Digital Adoption: A Necessity, not a Luxury

Companies like Amazon, Kroger, Patagonia, and Zara have had great success with digital shelf technologies. But digital shelf technologies are no longer just a luxury designed to help digital retail leaders extract further benefits from their advanced data capabilities. They are becoming a necessity for any retailer aiming to deliver a reliable omnichannel customer experience in today’s unpredictable consumer markets.

Soon, digitally advanced retailers will be able to embrace robotics — not just mobile devices and CCTV cameras — to enable continuous 24/7 shelf scanning and noncompliance alerts. While these next-gen robotics solutions may not be appropriate for all retailers, retailers need to realize that soon, they will be competing with players whose shelves are virtually perfect. Today, a few missing items is a minor inconvenience. Tomorrow, customers may view even small anomalies as signs of incompetence. To ensure customer trust, all retailers of any scale need to begin exploring how digital technologies can deliver pristine, fully stocked shelves. 

About the Author

Michael Neff
Global Lead, Wipro Consulting – Consumer

Michael brings more than three decades of experience in consulting, program management, and technology-driven business and process transformation that cuts across CPG, retail, and transportation. He has a proven track record of driving sales growth, cost savings, and improved customer engagement KPIs for global enterprises in areas such as supply chain, digital/eCommerce, business-IT alignment, and project lifecycle management. In his previous roles, Mike has consulted for iconic brands across the globe.